No.you do not have to; There is no requirement to inform the IRS about the closing of your sole proprietorship. Your final Sch C does not have to include any kind of notification. So, it is not necessary that you write "Final Return", or any other comment on Sch C. Simply fill out your final Sch C as if the business was still active. If your business was inactive for the entire year, it is not necessary to file Sch C. Your business is considered inactive if it had neither incomenor expenses for the entire year